Fed and Congress home stretch

Next week the Fed’s long anticipated July meeting of the Federal Open Markets Committee (FOMC) occurs on Tuesday and Wednesday.  At the conclusion of the meetings Fed Chair Powell will meet the press at 2:30pm on Wednesday.  These briefings can be market-moving events and immediately follow the announcement of the Fed’s rate decision.

With Washington taking an August break the FOMC will not meet again until September 20-21.

Congress

Congress plans to leave DC for its August break no later than Friday, August 4 and there are two high priorities they’d like to complete in the next two weeks.

The first is the so-called CHIPS Act which would pour billions of dollars into the domestic production of semiconductors.  The centerpiece of the legislation is $52B in tax credits for construction of US plants.  The bill must first pass the Senate and then go to the House.  On the first test vote in the Senate this past week the vote was 64 to 34 demonstrating there was more than enough Republican support to overcome any filibuster.   

The next test vote will be early next week and the hope is to give final Senate approval in time for the House to approve the bill prior to their departure for the August break.

The other high priority for Congress prior to the August break is the slimmed down Budget Reconciliation Bill that at this point is a healthcare package.  After months of talks between Senate Leader Schumer and Senator Joe Manchin, the Senate Democrats appear united on a Reconciliation package that will include new authority for the government to negotiate with the pharmaceutical industry on Medicare Part D prescription drug prices, and a two-year extension of Obamacare premium subsidies that were part of the Covid relief legislation.  The Senate will try to pass this Reconciliation bill prior to the August break and send it to the House where Democrats appear disappointed but ready to pass the legislation.

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